In the last few years, large corporates and government organisations have trialled voice-over-IP (VoIP) technologies and IP telephony applications, both internationally and locally. Now, as VoIP success stories emerge, and businesses learn how easily IP telephony applications can be deployed, smaller companies are joining the party.

Most people are aware that VoIP reduces voice and video telecommunications charges and the capital and human resource cost of maintaining separate voice and data networks. But experience is showing that staff and customer satisfaction, and productivity have the potential to rise as a result of the internal efficiencies – the so-called “soft” benefits that VoIP affords.

Colin Steeples, general manager for Amtel Communications, says once a VoIP network is established, IT departments and teams can manage day-to-day telephony functions that would traditionally require a PABX technician. He points to a 2005 Intel VoIP cost analysis study which calculates a 52 percent reduction in the cost of moves, add-ons and changes between legacy PABX systems and new open-standards VoIP network installations.

“Our customer, Siemens was spending $1,500 to $2,000 a month on an audio conference bridge. After moving to VoIP, they don’t need to do that anymore,” says Steeples. In Intel’s study, telecommunications-related capital purchase costs were estimated to be halved, and Intel put a price on the increase in employee productivity an open-standards VoIP system affords: up to $US500 per employee per year. David Barker, Cisco New Zealand country manager says that by combining business processes, applications and an intelligent [VoIP] information network, organisations can achieve three to five times the productivity improvements.

VoIP services are also being established over different communications networks. In May, the Sydney Morning Herald reported that Adelaide Beach Petroleum, a company with a drilling rig 800 kilometres from Adelaide and 150 kilometres from the nearest town, was relying on satellite communications to stay in touch. Satellite voice and data services cost up to $A300 a day until the company cut its bill by two-thirds by adopting a satellite voice over internet protocol (VoIP) system. Voice calls now travel as data to Adelaide via satellite where they link with the local telephone service and are charged at local call rates. Internet access is available at up to 512 Kbps. Adelaide Beach Petroleum systems supervisor Simon McMahon was quoted saying the system paid for itself in about six months.

Less labour; less cost
Peter Naylor, solutions manager for Orb Communications, says while people talk most about how VoIP saves on call charges, the real savings probably occur in reduced human resource costs, seamless call transfer and the convenience of having remote workers able to access office telephony applications.

“The biggest VoIP benefit is the ability to see and support remote workers, closely followed by improved business continuity,” says Naylor. Company and location-wide visibility is a significant business advantage, agrees Paul Douglas, head of enterprise IP voice for Telecom. Douglas says when the PC and phone start working together, businesses suddenly have the ability to see when people are away or on holiday in advance. “The advantages are in unified messaging, in the ability to configure the phone to suit your business need; and to determine where your calls will go, to what device, and what messages people will get,” says Douglas.

Verdon Kelliher, northern ITS sales manager for IBM New Zealand, says: “Take an organisation that wants ubiquitous access across their entire site for anyone, anytime, anywhere and have that access secure - or a business with multiple suppliers bringing goods in left, right and centre - a VoIP application allows them to speak to their suppliers and customers in so many different ways – for example RFID over VoIP.”

Kelliher says in the enterprise VoIP space IBM predominantly deals in, one IBM customer reported a 30-minute per day increase in productivity per person; others accept VoIP as a known technology they will end up using. Despite some obstacles, smaller businesses are reaching the same conclusion.

Mobile and contactable
Remote access to a central IP telephony system requires a fast data connection at the remote workers end, however, with the data performance of wired and wireless connections increasing and the progression of all telcos towards so-called “Triple Play” services – wired and wireless telecommunications network services able to send and receive calls made up of voice, data and video at speeds of around 20Mbps – a fully functional mobile workforce is a looming reality for VoIP network owners.

Amtel’s Steeples says the future ‘killer’ VoIP application will probably involve a converged mobile phone device and integration of VoIP technologies and mobile business applications. “People will eventually walk away from their desks with a WiFicapable cellular mobile phone with a full desktop application presence.

Users will fully manage the way they interact with callers because the mobile device will access all the IP telephony features of the VoIP network as well as features of mobile network services,” says Steeples. Jason Trower, solution delivery manager for Hewlett-Packard, says VoIP applications like unified messaging, combined voice and video conferencing and ‘presence’ technology, which shows telephony system users where other people in the system are, are becoming increasingly important to customers with a mobile workforce.

“The next step will be VoIP applications used more flexibly across these networks – for example, to link a PDA, mobile device and LAN connection more seamlessly. Just look at the number of times people in meetings now take a quick text message instead of a phone call,” says Trower. Telecom’s Douglas says VoIP network users can easily program calls to divert to a mobile phone at certain times of the day and individual phone numbers can be programmed to go to specific devices. And IBM’s Kelliher says: “The telephony and communications applications available on a mobile phone are now available on the desktop.”

Barriers
Considering the well-touted advantages of VoIP and IP telephony, what prevents some businesses from investing? Trower says too many still view VoIP as a technology investment rather than a business investment, and knowledge of what VoIP can offer is still filtering down to smaller businesses. He says businesses may also need to realise a return on investment from a legacy telephony system or to wait until data and telephony network upgrade timing aligns.

“If I was a CIO and could have the two compelling events of a data network and telephony system both ‘end of life-ing’ at the same time, I would be happy because a VoIP network would be the [obvious] next step,” says Trower.

Kelliher says legacy investments in traditional PABX technology are the most significant barrier to VoIP adoption IBM sees; while Telecom’s Douglas says most New Zealand VoIP implementations Telecom sees involve businesses moving premises or those that want an emerging telephony application that requires a VoIP network.

“Businesses with a traditional PBX system that’s working need to see something compelling to make the change. To see the benefits you have to experience them; this is why small trial sites are common,” says Douglas. (See also Telecom's IP Voice Demonstration Centre.)

Orb Communications’ Naylor says the cost of upgrading network infrastructure to carry voice reliably may be too expensive for smaller businesses, many of which don’t understand the intricacies of network infrastructure. He says VoIP quality of service can be an elusive thing – one Orb Communications customer, Allied Workforce, has 18 sites across the country running Avaya One Office IP telephony software and no issues with poor voice quality, while another with two staff working from home across broadband VPN connections has had issues with VoIP links dropping.

“There is a little bit more risk in using a [standard broadband phone line] connection for VoIP compared with a secure office data network [because] the performance of the broadband connection waxes and wanes depending on Internet traffic,” says Naylor. However, Telecom’s Douglas says within the office network VoIP users can choose their levels of quality and service.

“I might be quite happy with a lower grade of service for my inter-site traffic; but for a quality call to an important customer, have settings to ensure a high quality call,” says Douglas.

Naylor says the quality of staff maintaining a VoIP system can be another barrier to project success. “You get voice people that don’t understand IT and IP, and networking or traditional IT integrators who don’t want the hassle of voice,” says Naylor.

Steeples says the cost of establishing a gateway between an internal VoIP data network and the traditional main trunk line of a telecommunications provider for VoIP calls to national branch offices, can also be off-putting. “A cheaper alternative is to use an ISP that is a SIP [Session Initiation Protocol] carrier. If businesses have access to a SIP carrier they won’t need to put in a gateway,” says Steeples.

Hosted or in-house?
Few businesses have the in-house resources to plan and implement a VoIP data network and some prefer to use a hosted VoIP solution from a major telco. Those that do invest in their own VoIP infrastructure usually do so in partnership with a VoIP specialist. Trower says as the PABX environment begins to disappear, some customers want a VoIP solution designed and installed but then want to manage it themselves. Like most IT implementers, HP leaves hosted VoIP solutions to the telcos.

“There will always be a certain percentage of customers who don’t want to manage their own environment,” says Trower. Telecom’s Douglas says Telecom is experiencing “moderate” uptake of its hosted IP telephony service, IP Centrix.

“At the moment businesses are more interested in their own [VoIP] infrastructure, but we are increasingly getting customers interested in a hosted service,” says Douglas. IBM’s Kelliher says while the future of VoIP and IP telephony for vendors is in hosted services, it’s “horses for courses” at present.

“There is absolutely a trend towards hosted [VoIP] services but some customers have the on-site smarts to do it themselves and this may be more cost effective for them at the moment,” says Kelliher.

Making the move
When it comes to VoIP planning, Trower says customers need to start with a business case for VoIP, and then research what they want. Future-proofing a network so it can run IP telephony applications at some point in the future is also a business need that VoIP network implementers can meet. And some customers want to keep traditional PABX functions but use VoIP applications too.

“An implementation partner needs a good understanding of project management and costs and to be able to workshop with the customer in the initial planning and sign-off stages,” says Trower.

Naylor says businesses need to know some traditional telephony system providers struggle to understand new VoIP technologies and may push hardware without problem-solving and solution selling.

“Some customers know more about VoIP technology than their telephony provider. There’s a lot of upskilling needed and telephony reps need to be [VoIP] trained and certified. At the same time, businesses need to remember they are not just buying a box anymore, but VoIP network knowledge and problem-solving skills.”

July 2006

By Vikki Bland